IFX Market Report for 24/07/2012

Sterling lost ground against euro yesterday having breached the 1.2860 psychological level over the weekend – despite fresh revelations regarding regional pressures on the Spanish economy. The session saw an early high of 1.2878 and a low of 1.2796.GBPUSD continued to fall in line with movement from Friday’s session, opening at the high of 1.5608 but receding to a low of 1.5485. USD barely reacted to the Fed’s purchase of Treasury securities in an extension of Operation Twist.

The Bank of England (BoE) cut its corporate bond holding in its asset purchase facility in the second quarter of 2012 by almost a third to £240m.

Surveys by Markit and Experian said the financial prospect for both UK households and businesses are improving. Manufacturing trade body the EEF said “the sector’s suffering will deepen this year”.
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WORLDWIDE

EURUSD was somewhat stable in comparison to the other majors with a high of 1.2136 and a low of 1.2067.

The euro sank to a 10 year low against JPY and is expected to keep falling as Spanish debt problems compound European debt concerns.

Spanish bond yields continue to rise as grave concerns over the financial health of Spanish regions intensify, increasing the likelihood the country will need a sovereign bailout.

Ratings agency Moody’s yesterday lowered credit outlooks for Germany, The Netherlands and Luxembourg from “stable” to “negative” in a clear warning that no economy is safe from the fall out of the Greek financial crisis. These three nations in particular are held to ransom by the need to pay out for further Spanish and Italian bailouts.

Adding to their woes Spain’s National Bank confirmed economic output shrank by 0.4% in Q2 after a 0.3% drop in Q1.

Consumer Confidence in the Eurozone fell in July from -19.8 to -21.6 where a reading of -20.0 was expected.

Today auditors from the troika of Greek creditors are expected in Athens to decide if Greece will receive its next loan of €31.5 billion by September.

Reserve Bank of Australia (RBA) governor Glenn Stevens gave little away about the outlook for interest rates this morning, simply stating settings are “about right”. Some economists still further rate cuts in August, eyes will be on key inflation data due on Wednesday.